India will abolish wealth tax and replace it with an additional 2% surcharge on the country's super rich, finance minister Arun Jaitley said on Saturday. The government will also reduce tax on businesses to 25% over four years from a current 30%, with a view to boosting spending and job creation, Jaitley said as he presented the government's full-year budget.
The income-tax slabs remained unchanged. Transport allowance exemption was increased from Rs 800 to Rs 1, 600 per month. "Individual taxpayers can benefit up to Rs. 4.44 lakh from fresh exemptions," Jaitley said. Read full text (PDF)
Jaitley said the government was committed to tracing black money stashed abroad and a comprehensive new law will be framed to track it. "On black money, a new structure including e-filing and tracking down is our abiding commitment," the finance minister said.
He said a "comprehensive new law to track black money" would be framed. He also said there will be rigorous imprisonment of 10 years under black money law. The finance minister said a benami property transaction bill will be brought to tackle black money transactions in real estate.
West Bengal and Bihar will get special financial assistance to give a push to the two states, Jaitley said.
Jaitley announced a budget aimed at high growth, saying the pace of cutting the fiscal deficit would slow as he seeks to boost investment and ensure that ordinary people benefit.
Jaitley, delivering his first full-year budget since Prime Minister Modi's landslide election victory last May, said growth would accelerate to between 8-8.5% in the fiscal year starting in April. A pace of 7.4% is expected for the current year.
"India is about to take off," Jaitley, 62, said early in his speech to lawmakers. "The world is predicting that this is India's chance to fly."
He forecast inflation at 5% by the end of the fiscal year ending March 2016, undershooting the Reserve Bank of India's 6% target and creating room to cut interest rates. Annual inflation was 5.1% in January.
Jaitley said he would stand by the fiscal deficit target for the 2014/15 fiscal year, which ends March 31, of 4.1% of gross domestic product.
But he pushed back by a year, to 2017-18, a deadline for cutting the deficit to 3% of GDP. In 2015-16, the deficit will be 3.9% of GDP, above the 3.6% target inherited from the last government.
"The 3.9 percent number will be negative for the markets," said Ananth Narayan, regional head of global markets at Standard Chartered in Mumbai.
The budget concentrates a year's economic policymaking into a single speech, and the range of measures Jaitley announced included a monetary policy overhaul, a bankruptcy code and the creation of a public debt management agency.
Jaitley, who underwent surgery last year to treat his diabetes, sat down around 20 minutes into his speech and continued to deliver his address from the government's front bench.
Stocks of travel companies Cox & Kings and Thomas Cook India saw mixed trend after Jaitley announced that visa on arrival facility would be expanded to 150 countries. Visa on arrival scheme would be expanded to 150 countries from the current 43 countries, the finance minister said in his budget speech.
The minister said the government would seek to boost the efficiency of the MNREGA scheme. “Rs 34,699 crore is allocated for MNREGA scheme,” he said.
There will be an increase in the limit of deduction in health insurance premium, Jaitley said. "Increase in limit of deduction in health insurance premium from Rs 15,000 to Rs 25,000." "For senior citizens, it will be Rs.30,000," he said.
The finance minister also announced 100% exemption from tax for contributions to the Swachh Bharat fund and the Clean Ganga Kosh by corporates under corporate social responsibility.
"Budget indicates our commitment to ensure that development of Eastern & Northeastern parts of India gets an impetus & drives future growth… I congratulate FM for doing an excellent job in respecting aspirations of the States & at the same time delivering on National priorities (sic)," Modi tweeted after Jaitley's speech. "From housing for all, jobs, health, education & total electrification, FM laid down goals to be achieved by 2022, India's Amrut Mahotsav," he added.
Jaitley earlier said the state of the country's economy was better placed with its credibility re-established by a series of measures taken by his government.
"I am presenting the union budget in an economic environment which is far more positive than in the recent past. While major economies of the world face difficulties, India is poised for higher growth trajectory," Jaitley said as he started his budget speech in the Lok Sabha.
"The real GDP growth is estimated at 7.5% for this fiscal, making India the fastest-growing large economy of the world," said Jaitley, watched keenly by Prime Minister Narendra Modi, seated next to him.
"We inherited a sentiment of doom and gloom and have come a long way by proper actions," said the finance minister, adding: "Our objective is to improve quality of life and to pass benefits to common man."
He also said a double-digit growth was now feasible. "Our objective is to conquer inflation. It will be only 5% by end of year."
Here are the highlights of the finance minister’s budget speech in Parliament:
# Corporate tax reduced from 30% to 25% for next four years
# Propose to enact a comprehensive new law on black money to bring back black money stashed abroad
# For strengthening information collection from various sources, a new structure has been put in place
# Budget Estimates of Expenditure: 17 .77 lakh cr, of which Non Plan is 13.12 lakh cr, and Plan is 4.65 lakh crores
# The problem of poverty & inequity cannot be eliminated unless generation of black money is dealt with effectively
# Measures to curb black money, job creation through revival of growth & investment, benefit to middle class tax payers
# GST is expected to play a transformation role in Indian economy, we're moving on various fronts on GST from next year
# We need to revive growth & investment to ensure more jobs are created for our youth
# It has been our endeavour in last 9 months to foster a stable taxation policy
# Taxation is an instrument of social economic engineering
# Unplanned expenditure for 2015-16 is estimated at 13 lakh 12 thousand and 200 crores
# Defence allocation for this fiscal is Ra2,46,727 Crores
# Special Assistance to Bihar and West Bengal
# IIT in Karnataka and IIM in J&K and Andhra Pradesh
# Keeping in view need to augment medical services in Bihar, I propose to set up another AIIMS like institution in State
# I propose to set up All India Institute of Medical Sciences (AIIMS) in J&K, Punjab, Tamil Nadu, Himachal and Assam...to ensure that no student misses out on higher education due to lack of fund
# Propose to set-up an IT based student financial aid system under the PM Vidya Laxmi scheme
# We intend to launch a national skills mission, which will consolidate skill initiatives spread over all Ministries
# Government proposes to bring in a regulatory reform law
# We're putting scam,scandal & corruption behind us,Parliament needs to look into a procurement law and how it will shape
# After success of visas on arrival in 43 countries,I propose to increase the countries covered under this scheme to 150
# Govt to do away with distinctions between FII and FDI and replace it with Composite Caps
# In order to support security of women,I have decided to provide another 1000 crores to Nirbhaya fund
# Will deepen Indian Bond Market at par with the World standards
# I propose to work on developing Indian gold coin which carries the Ashok Chakra, will help recycle gold available in country
# India is the largest consumer of gold in the world, I propose to introduce a gold monetization scheme
# This is just the beginning, I intend to create a direct tax regime which is internationally competitive on rates
# This will have 2 features, will make this year's allocation highest, will also help in increasing rural wages
# Will enhance the allocations to MNREGA by 5000 crore
# Govt proposes to set up 5 ultra mega power projects, each of 4000 MW, will be plug and play projects… I'm setting aside 1000 crore for this
# World is predicting it is India's chnce to fly
# The credibility of Indian economy has been restablished,the World is predicting that it's India's chance to fly: Arun Jaitley
# We are round the clock, round the year Government: Finance Minister Arun Jaitley speaking in Lok Sabha
# The latest CPI inflation is 5.1 % and whole sale price inflation is negative
# Foreign inflows since April 2014 has been $55 bn
# The rupee has become stronger by 6.4 %
# Domestic and international investors are seeing us with renewed hope
# Of the work we have done, I'd like to talk of three achievements, 1st is success of Jan Dhan Yojana:
# 3 major achievements: Jan Dhan yojana, transparent coal auction, Swacch Bharat to rejuvenate India
# Our objective is to keep inflation below 6 percent
# Incremental change is not going to take us anywhere, will need to think in terms of quantum jump
# All schemes will centre around substantial reduction of the poor
# 50 lakh toilets built in 2014-15, will meet target of 6 crore toilets to promote
# Roof fr each family in India,to fulfill Housing by 2022 must build 2crore houses in rural India,4crore in urban areas
# Providing medical facilities to each one of village and city is essential: Arun Jailtey
# Rural-urban divide should no longer be acceptable to us. Ensure connectivity to all villages
# Housing for all by 2020
# Well off should give up subsidised LPG cylinders
# To support agricultural sector, I propose to allocate 25000 crore in 2015 to rural development fund
# Rs 8.5 lakh crore of farm loan credit during 2015-16
# We need well targeted system to rationalise subsidies
# Micro units development refinance agency- MUDRA bank
# 62 % of 5.77 crore small units are owned by SC/STs and OBCs; mirco-units for refinance agency
# To increase income of our farmers, we propose to create a national agriculture market
# Just as we are banking the unbanked, we are funding the unfunded
# Will create Mudra Bank with corpus of Rs. 20,000 crore for microfinance
# We will bring a comprehensive bankruptcy code in 2015-16 according to global standards
# We will also launch the 'Atal pension yojana', which will provide a defined pension
# Government is committed to bring a Universal social security system for all
# Universal Security System to include the poorest layer in society
# Senior citizens welfare fund to subsidise the premium for elderly people
# Proposes appropriating unclaimed Rs 3000 cr from PPF accounts to subsidise premiums of sr citizens
# Intends to establish a national investment and infrastructure fund
# Tax free infrastructure bonds for projects in roads, railways and irrigation
# Investment in infrastructure to go up by Rs. 70,000 crores
# Govt is establishing a mechanism 'self employment' to support all aspects of start up business. I'm setting aside 1000 crore for this purpose
# PPP model of Infrastructure to be revitalized and realigned
# Govt proposes to set up 5 ultra mega power projects, each of 4000 MW
# Expert panel to prepare draft legislation to replace the mutiple prior approvals
# Enhanced allocation to MNREGA by Rs 5000 crore
# Set up public debt management agency
# Forward Markets Commission to be brought under SEBI
# Task for setting up sector neutral grievance redressal agency
# Hope to introduce the Indian Financial Code
# Direct tax regime will be internatinally competitive with smooth GST for indirect taxation
# With respect to ESI, employee should have an option of choosing between ESI or health insurance
# For employees below a certain threshold income, contribution to EPF should be made optional
# Introduce a gold monetisation scheme to allow to gold depositors to monetise gold
# Propose toa nnounce several measure sthat will incentivise debit or credit transactions
# To launch sovereign gold bond
# Will deepen Indian Bond Market at par with the World standards
# Has vision of putting in place a direct tax code regime at par with international rates
# Propose to allow foreign investmet in alternative investment funds
# Another Rs 1000 cr for Nirbhaya fund
# Increase in health insurance premium deduction to Rs 25,000 from Rs 15,000
# Increase in exemption limit of health insurance premium from Rs 15,000 to Rs 30,000
Full Coverage: Union Budget 2015
Video: Highlights of Budget 2015